CONSTRUCTIVE TOTAL LOSS: THE RELIEF FOR THE OWNER OF SECOND-HAND OR USED VESSEL

Ahmad, Mohd Sharifuddin and Abd Ghadas, Zuhairah Ariff and Haron, Ahmad Sharif (2015) CONSTRUCTIVE TOTAL LOSS: THE RELIEF FOR THE OWNER OF SECOND-HAND OR USED VESSEL. In: 4th International Conference on Law and Society ICLAS 2015, 10-11 May 2015, Universiti Sultan Zainal Abidin.

[img] Text
ICLAS IV Proceedings.pdf
Restricted to Registered users only

Download (9Mb) | Request a copy

Abstract

Marine insurance is a medium to safeguard and protect the interest of the assured for any damage suffered during the valid policy contract. It will restore the assured to the same financial position enjoyed before the loss. However, the insurers are only obliged to indemnify the assured based on the damage suffered. The assured are only entitling for indemnity for loss and not a profit. It is a crystal clear rule provided by s.3 of the Marine Insurance Act 1906 by saying that the insurance is a contract of indemnity and It is confirmed by the application of rules in the case of Brotherston v Barber (1816) 5 M&S 418. For instead, if the ship which is cost 20 million collide with any moveable or unmoveable objects or structure and beyond any repairs, thus, upon receiving the detail on the subject, the owner of the ship will entitle for the ship which is cost 20 million but will not entitle for the sum exceeding the ship value. The problems arises when the company decides to buy a second-hand or used vessel which is consisting of high cost machinery with lower price. It is a common practice when the ship-owner company turn to buy a cheaper second-hand vessel instead of buying a new one. However in the situation where the damage occurs and the cost of repair is exceeding the price of the vessel, it will bring problem to the owner since the principle of “indemnity” apply in contract of marine insurance. It is a predictable and foresee situation when the cost of repair of the second-hand and used vessel apparently higher than the price of the second-hand or used vessel when it was bought. In this situation, the assured are refraining from receiving the claim which is higher than the actual cost. The same consequence for the detained vessel and the cost of recovery is higher than price of the vessel since it is a second-hand or used vessel. Furthermore, there are several factors lead to the drastic trend of having a ship and there are many service providers who become the second-hand or used vessel agent. By browsing via Google, we will find several website which is promoting and advertising multiple types of second-hand and used vessel for sale. This is a doctrinal research which is qualitative in nature. The paper will discuss and examine the above situation by referring to main sources of law as an authority to back up the views and opinion by referring to several principles under the law of marine insurance and other related law.

Item Type: Conference or Workshop Item (Paper)
Subjects: K Law > K Law (General)
Faculty / Institute: Faculty of Law, Accountancy & International Relations
Depositing User: Prof. Dr Zuhairah Ariff Abd Ghadas
Date Deposited: 05 Jan 2016 02:21
Last Modified: 05 Jan 2016 02:21
URI: http://erep.unisza.edu.my/id/eprint/4430

Actions (login required)

View Item View Item